Drabsch v Switzerland General Insurance Co Ltd

[1999] NSWSC 777

CITATION:	Drabsch v Switzerland General Insurance Co Ltd [1999] NSWSC 777
CURRENT JURISDICTION:	Equity
FILE NUMBER(S):	3008/93; 2264/93; 2323/97; 2324/97
HEARING DATE(S):	13 July 1999
JUDGMENT DATE:	13 July 1999
PARTIES :	3009/93 Neil Gregory Drabsch (P) Switzerland General Insurance Co Ltd (D1) Andrew Chua (D2) Peter Edward Lepparde (D3) Allan Robert Whitehead (D4) Michael John McErlane (XD to 3rd XC) 2264/93 Neil Gregory Drabsch (P1) Julie Ann Drabsch (P2) Switzerland General Insurance Co Ltd (D1) Switzerland Insurance Australia Ltd (D2) Switzerland Insurance Holdings Ltd (D3) 2323/97 & 2324/97 Michael John McErlane (P in 2323/97) Neil Gregory Drabsch (P in 2324/97) Reginald Ewart Brown (D1) Aegon Insurance Co (UK) Ltd (D2) Sirius (UK) Insurance plc (D3) Scottish Lion Insurance Co Ltd (D4) Switzerland General Insurance Co Ltd (D5)
JUDGMENT OF:	Hamilton J

COUNSEL :	A B Shand QC and C E Moore (Drabsch) S Rares SC and G Nell (McErlane) J E Marshall and R S Hollo (Switzerland General) P W Taylor SC & S Donaldson (Underwriters) D G Charles (Superannuation Trustees)
SOLICITORS:	Brock Partners (Drabsch) Levingstons (McErlane) Minter Ellison (Switzerland General) Phillips Fox (Underwriters) Clayton Utz (Superannuation Trustees)
CATCHWORDS:	PROCEDURE [101] - Supreme Court - NSW - Procedure under SCR - Amendment - Late application - Whether prejudice curable.
CASES CITED:	The State of Queensland v JL Holdings Limited (1997) 189 CLR 146
DECISION:	Application to amend defence refused.

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

HAMILTON J

TUESDAY, 13 JULY 1999

3008/93 NEIL GREGORY DRABSCH v SWITZERLAND GENERAL INSURANCE CO LIMITED & 3 ORS
2264/93 NEIL GREGORY DRABSCH & ANOR v SWITZERLAND GENERAL INSURANCE CO LIMITED & 2 ORS
2323/97 MICHAEL JOHN McERLANE v REGINALD EDWARD BROWN & 4 ORS
2324/97 NEIL GREGORY DRABSCH v REGINALD EDWARD BROWN & 4 ORS


JUDGMENT (on application to amend defence)

HIS HONOUR:
1 SGI applies for an amendment to its defence to rely on a payment, said to have been made of an expense incurred by Mr McErlane, as having been authorised by Mr Drabsch rather than by Mr Lepparde, as was heretofore alleged in what has been called in this case the item A table. There is background to this matter. An earlier application was made to amend the cross claim against Mr Drabsch in the same fashion while Mr Drabsch was in the middle of his cross examination, which extended over many days, and I refused that application. This application covers the same factual subject matter but, as Mr Marshall of counsel for SGI points out, is different, in the sense that he did not then seek to amend the defence, but only the cross claim. He has not sought to reopen my refusal of the amendment of the cross claim. The way that the matter arises is that many of the same items are agitated by SGI, both as items of justification of the dismissal of Mr Drabsch by way of defence and as items of the cross claim made against him, which it is said that the company is entitled to recover from Mr Drabsch as wrongly expended by him or authorised by him to be expended.

2 Mr Marshall has, in a succinct and helpful written submission, emphasized to me the principles now operating in these courts, as to the circumstances in which amendments of pleadings ought or ought not be granted. Substantially, those are the principles confirmed by the High Court of Australia in The State of Queensland v JL Holdings Limited (1997) 189 CLR 146. Those principles I, of course, adhere to.

3 However, evidence has been put on which indicates that Mr Drabsch would be prejudiced in defending an allegation cast in the way now sought, if the amendment were permitted. It now appears that Mr McErlane says that this item of expenditure was not, indeed, ultimately borne by the company. Either he paid it or, if it were in the first instance paid by the company, he reimbursed it to the company because it was a private expense. He cannot now find his financial records for 1991. He believes they were destroyed when he moved to New Zealand. What is more, the records of banks and credit card companies through the payment, whether direct or by way of reimbursement, may have been made are lost. This is illustrated by the fact that Barclays Bank indicates that it destroys credit card statements after six years, and that is of some relevance, since the evidence indicates that there were other occasions at about the relevant time in 1991 that Mr McErlane himself made payment for such expenses through a Barclays Bank credit card.

4 It is technically true that a case against Mr Drabsch is on the present pleadings open on the basis that, where expenses of Mr McErlane were authorised by other people, Mr Drabsch should be regarded as being liable to the company because it was he, not other people, who should have authorised Mr McErlane's expenses. However, very little has been heard of that case during the course of the trial. Mr Drabsch was not cross examined on it, and it seems to me a case to be virtually impossible of success, both in its nascence, and certainly as the evidence now stands, some 11 or 12 weeks into the trial. It is now sought to face Mr Drabsch with a different case, namely, that it was he who made the relevant authorisation, and did so wrongfully. This case may have been stronger and is certainly quite different in nature from a case that he was responsible because, on some occasion, some other person authorised an expense of Mr McErlane instead of him, which, as I say, I regard as virtually untenable on anything that I have seen or heard. Faced with the case, as now sought to be raised by the amendment formulated in July of 1999, it seems to me that the evidence that has been led quite specifically shows that he will be under prejudice through loss of records in establishing his defence to the matter if it is allowed to be brought forward now. By this I mean that he would be subject to prejudice immediately after the allowance of the amendment that he was not subject to immediately before it. In view of the fact that those documents are now lost, that prejudice cannot be cured by an order for costs, nor has any other way of meeting the situation been suggested. In these circumstances, the application for amendment of the defence is refused.

5 I should say, so that it is clear, that I am quite well aware that matters relating to this subject matter may well be able to be put to the remaining witnesses, particularly Mr McErlane, as going to their credit; nonetheless, I think it inappropriate that the amendment be allowed. The application is refused.

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